Before the First World War, the United States was a debtor nation (with limited output and limited resources to buy them as well). However, the tables turned when the First World War started. During the War, the United States started supplying both sides of the War with arms, Ammunition, War-related material, Weaponry, food, agricultural produce, etc.
In return, the United States sought Gold. European Nations that were part of the War had plenty, as they had plundered the same from their colonies. The situation continued till the Second World War, and the result was – the US emerged as the country with the largest Gold reserves, and that still holds good today with ~ 8134 metric tons of Gold, with Germany being the second largest with 3360 metric tons of Gold (less than half what the US holds).
During the Second World War, the United States came up with a Unique military model to supply the Weapons Lend and Lease Program, whereby ~ USD 50.1 billion (then in 1941) worth of supplies, equipment, and Weaponry were given to friendly nations at War, predominantly the UK, to fight against the Axis Powers.
The program was simple, materials were delivered and are to be used until returned or destroyed by the lessee or borrower. The Same material was then eventually sold to the borrower or lessee, with the United States giving them long-term loans to buy them. This ensured that the monopoly on military supplies, equipment, arms, and ammunition remained with the United States.
This opportunism has been with the United States for centuries. Decade after decade, the United States has conveniently and silently looked at the interests of big lobbies and has worked in their interest, rather than seeking the well-being of its people or its friends, neighbours or the World at large.
In the 1950s, the United States and China were in direct conflict on account of the Korean War, where China was the biggest patron of North Korea, whilst the United States was directly fighting for South Korea under the umbrella of the United Nations. The Battle of the Ch’ongch’on River and the Battle of Chosin Reservoir were decisive milestones in the Korean War, where the Chinese pushed the United States-led UN Army back.
Since the 1950s, the trade and commercial relations between the United States and China dropped to a Nadir. Post World War 2 (though European countries only fought, still it’s called World War), American companies started to sell aggressively to their market newly found white goods, cars, radios, etc. As the market started to get saturated, they craved for new markets and found a new population hub to sell products – China. This is the time when 21 years of conflict got resolved in minutes with President Nixon removing the trade embargo in 1971.
Once the US companies landed to sell their products to such a large population in China, they realised the wealth of the Chinese is still modest, and instantly they altered their plan.
Instead of selling products to the Chinese, they stated creating infrastructure in China to use their cheap labour to manufacture in China and sell it to the World, including in their own country, maximising the Profits of a few Capitalist lobbies.
The Trump Tariffs – the previous term, Parallel
In the first term, Trump levied tariffs on various countries, mainly China, across a range of products including solar panels, Washing machines, steel, aluminium, etc. Tariffs were also levied on some of the closest allies of the United States, including Canada, Mexico and the European Union, which, after a year of negotiations, were removed.
However, Chinese tariffs persisted through Trump’s first term, and they hurt America’s middle-income and low-income people. In 2017-18, Oxford Economics estimated that the incremental household cost for an average American household will jump by USD 500 to USD 1000, depending on consumption, changes in tariffs over the years, and reciprocal tariffs by the countries.
This is a ~ 1.5 per cent to 2 per cent jump in their expenditure. One needs to remember that the average in 2019 had a personal debt, including credit card, personal loans, mortgage, and student debt, that stood at USD 90,640/=, when the median income for the US household was USD 61,937/=. Already indebted average US household had to bear the further brunt of these tariffs.
For the low-income Americans, the United States’ levied tariffs were worse. In 2017, the Trump administration brought in tax cuts under the Tax Cuts and Jobs Act of 2017, which benefitted low-income households of America immensely; however, with the levy of tariffs, the cost for average low-income households went as much as TWENTY times as compared to the benefits that arose from the tax cuts.
The Profane Plan
Several journals and newspapers of the United States, including Bloomberg, stated that the American firms that donated to the Republican Party are less likely to face tariff levies compared to those that did not donate or who donated to the Democratic Party.
Big Oil companies donated and spent a whopping USD 445 million in the last United States Presidential Election to re-elect Mr. Trump.
Similarly, defence companies have been amongst the top donors donating generously for elections through the decades. However, with the 2024 elections, bias was towards Trump’s re-election as he was seen as a pro-defence candidate and he placed more weight and emphasis on expanding the missile defence systems, whilst Biden and Kamala Harris were viewed as candidates who wanted Arms Control as their top priority.
However, the biggest donation to the Presidential Elections came from the World of Cryptocurrency, which contributed nearly one-third of the total donations, and of which two-thirds went to re-elect Trump.
Trump has lived up to the crypto World by bringing formal legislation in favour of and the use of crypto. Sadly, it has been alleged that President Trump has a direct personal interest in Pakistan’s crypto council, which is looking to digitise public assets and public utility services. President Trump’s sons Eric, Donald Junior, and his son-in-law Jared Kushner, 60 per cent of the company that has signed a letter of intent with the recently formed Pakistan Crypto Council. All these developments happened just days before the Jammu and Kashmir’s Pahalgam attack, where innocent Hindu civilians were brutally killed after asking their religion and seeking proof to verify the same.
Effectiveness of Sanctions and Tariffs as a Tool
On May 11, 1998, the World was taken by surprise when the Prime Minister of Bharat Shree Atal Behari Vajpayee announced the successful testing of three thermonuclear devices, with one being conducted under nuclear fission. It was the moment of Bharat arriving strongly and decisively on the nuclear stage, repositioning itself as a strategic nuclear power.
US Intelligence that tracks global nuclear activity like a hawk failed collosally to detect any activity before the tests or the preparedness that Bharat had before the tests were conducted.
Immediate reaction of these tests were sanctions and embargoes by the United States including termination of sale of any military items, military assistance, suspension of any foreign aid (not that Bharat has taken many times), prohibiting credit and guarantees by the US government agencies, stoppage of US banks to give loans to Bharat and her government owned institutions and a few others.
Not only does the US levy sanctions, but it quickly garnered support from allies, the G-8 countries, to extend financial aid from international organisations that act as puppets in the hands of the US and the erstwhile G-8 (G8 itself is changing as their economies are collapsing).
Chapter 6, Verse 5 of Shreemad Bhagvad Geeta speaks of a Sanskrit word “उद्धरेदात्मनात्मानम्” which means “Elevate or raise yourself by yourself”.
When the Western World shut its doors and Windows for Bharat, Bharat started looking internally and reinventing its inner self. Several marquee infrastructure projects were initiated to Rebuild Bharat, including the Golden Quadrilateral under the National Highway Development Program, building the Konkan Railway, turning around hydel, thermal and nuclear power generation and many more.
The result of which was, in FY 98 (March 31 1998, before Pokhran II tests, where the real GDP growth of Bharat was at 5.0 per cent, the real GDP growth for FY 1999 swelled to a gigantic 8.8 per cent.
Eventually, the US realised that these sanctions could hurt the US’s economic interest more, as Bharat’s demographic dividend was strengthening. Bharat was emerging from the shadow of submissive politics, and the Bush administration started to normalise relations with Bharat in 2002.
Furthermore, 9/11 taught the US that if snakes are bred in the backyard, eventually they will come to bite the breeder itself, and it’s better to have an ethical, value-oriented and morally strong foe than a morally corrupt, sly and slimy friend, as stated earlier by Acharya Chankya.
The Current Context
Bharat has always worked for her interest and in the interest of the Weaker nations and the World whether it was covid time, when Bharat supported Global South with free Vaccines, when the Western World was selling them, the financially challenged Global South at top buck or whether any country was struck with a natural calamity like Turkey’s Earthquake, when Bharat sent it’s relief aid and force at lightening speed to save lives and reduces distress of people arising out of natural catastrophe.
Similarly, Bharat has been working neutrally with Russia, buying Russian oil and Russian military equipment to secure its energy needs as well as to secure its geographical and maritime borders that hostile neighbours infest.
However, the United States, ignoring the goodness and kindness of Bharat, has levied a 25 per cent tariff on goods exported to the US, higher than Japan with 15 per cent, Indonesia with 19 per cent or Vietnam with 20 per cent. In addition, the United States has imposed a further 25 per cent penalty on Bharat as Bharat buys Russian Arms and Oil.
Bharat was anticipating this erratic behaviour and hence to counter this situation, Bharat has been working hard for years and has already entered into comprehensive bilateral trade agreements with the UAE, Australia, European Free Trade Association (EFTA), which includes countries like Iceland, Liechtenstein, Norway, and Switzerland and most recently with the UK.
When one throws a burning coal at someone, first it burns their hand. An example of it can be seen in the US tariffs.
Pharmaceuticals, which are an essential part of the US system, will be severely affected by these tariffs on Bharat. Four Bharat companies supply out of ten prescription drugs in the US. Since Bharatiya drugs are efficient and cheaper, they save ~USD 220 billion annually for the US healthcare system.
Furthermore, the United States president has stated that they have signed a deal with Pakistan to set up Oil Reserves and eventually believe that Bharat would buy oil from Pakistan one day.
It’s clear the US has not learnt its lessons from the past of 9/11 or several others it has had in its history. Bharat will face some challenges initially due to these tariffs, but eventually it will rise as has happened in the past.
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